Autoworkers earn less to bring manufacturing jobs back to the U.S.

Autoworkers earn less to bring manufacturing jobs back to the U.S.
Jeff Green
and Keith Naughton
Automotive News | October 21, 2012 – 12:01 am EST

DETROIT (Bloomberg) — Debbie Werner is the face of an American workers’ revolution.

In a break with decades of U.S. auto-union tradition, the prevailing wage paid to new unionized autoworkers is less than that of the average laborer producing items ranging from metal and wood products to food and beverages.

Werner has lived through it all: She joined General Motors Corp. in 2008 before its bankruptcy, lost her job when the factory closed and then was rehired in 2011 when it opened again after the bailout — joining thousands of new workers earning about half what autoworkers were paid before 2007 and without traditional pensions and retiree health care.

Part of President Barack Obama’s re-election platform is his 2009 decision to support an $85 billion bailout for the U.S. auto industry, the subject of a vigorous exchange at the second presidential debate. Less understood is the new class of autoworkers who, even before the bailout, started taking jobs that gave up decades of union gains and agreed to an uncertain economic future to bring thousands of jobs back to American factories.

“In 1960, an autoworker was the symbol of high productivity, global leadership and a middle-class future,” said Harley Shaiken, a professor of labor relations at the University of California at Berkeley. “Today, an autoworker is a symbol of all the pressures of the global economy.”

Werner, though, said she couldn’t be happier.

An opportunity

“It’s just an opportunity for me,” said the 30-year-old, who installs seat-belt covers and dashboard parts on Chevrolet Sonic and Buick Verano cars at General Motor Co.’s factory near Detroit in Orion Township, Mich. “It’s a better life for my kids.”

Since 2007, the UAW has agreed to let automakers hire new workers who forgo traditional retiree health care, equal pay for equal work, job security and pensions in exchange for jobs that would have gone to Mexico or Asia. About 13 percent of GM, Ford Motor Co. and Chrysler Group LLC hourly workers, or 15,155 employees, now are entry level.

The union’s concessions were inconceivable — and easily rejected by labor leaders — just a few years before. Now, as many as half the workers at the Michigan factory assembling Sonic and Verano sub-compact cars make less than the $19.10 hourly average U.S. manufacturing wage and lack traditional union retiree benefits.

The U.S. economic recovery has been built on the shoulders of autoworkers such as Werner, who left a $9 an hour job at a nursing home in November for her $16.78-an-hour position at GM.

Autos contributed 18 percent of the 2.2 percent average rate of growth for gross domestic product in the recovery that began in the third quarter of 2009 — when GM followed Chrysler out of U.S.-backed bankruptcy — to the second quarter of 2012, according to data from the Commerce Department.

Faster sales pace

The U.S. auto industry sold cars in September at a faster rate than in any month since March 2008, before the failure of Lehman Brothers Holdings Inc. GM earned $9.19 billion last year. Automakers throughout the U.S. have been on a binge of hiring that has led to third shifts in eight states.

Werner’s relative prosperity is a sharp contrast with the lives autoworkers lived in past decades, when UAW members often made 20 percent to 50 percent more than the prevailing manufacturing wage — particularly from the mid-1980s, according to U.S. data. Overtime during a truck boom in the late 1990s meant some workers cleared $100,000 a year.

The compromises will close the labor-cost gap at GM, Ford and Chrysler factories with those at U.S. plants for Toyota Motor Corp. and Honda Motor Co., Kristin Dziczek, director of the labor and industry group at the Center for Automotive Research in Ann Arbor, Mich., said in an interview. By 2015, GM’s total cost for wages and benefits will be about $59 an hour, compared with $56 at Toyota. In 2007, GM estimated the gap with Toyota at $25 to $30 an hour. Chrysler’s average hourly labor costs may fall by 2015 to $53, lower than Toyota’s, CAR said.

Unfamiliar territory

Applying the hourly rate for Werner and Ramirez to a 40- hour week, 52 weeks a year, would total about $35,000 to $38,000 annually. Overtime and other premiums, such as for working night shifts, can increase those totals. This is unfamiliar territory for a U.S. autoworker: between the 2011 median income of $50,502, and the poverty line of $23,000 for a family of four.

Werner first came to GM for a temporary job at the Orion plant, which was then building Malibu sedans. Her cousin, who works at another GM factory in Michigan, helped her get that job. GM was about to enter bankruptcy and the plant was expected to close.

“In 2008, it was very depressing,” Werner said in an interview over lunch at a Denny’s restaurant not far from the elementary school her two sons attend in Sterling Heights, Mich. “Both the permanent employees and the temps knew they were going to get let go.”

She said she didn’t want to live on unemployment benefits after the plant shut down, so she took the job at the nursing home. In the meantime, she went back to school to add a bachelor’s degree in health-care management to her associate’s degree in business from Baker College. Her bills mounted. Her sons, ages 6 and 8 now, heard “no” way more often than “yes,” she said.

“I gave up on GM,” she said. “I didn’t think I’d ever go back.”

The Orion plant closed in November 2009. While GM said at the time it might open at some point, workers weren’t sure.

Plant reopening

Orion did open. It began making Sonics in August 2011 and in November added the Verano.

On Nov. 24, Debbie Werner got a call to be at the Orion Township plant the next day if she wanted her old job back. She was a temporary worker until June, when she was hired full-time. All her benefits will kick in shortly after a probationary period expires, she said.

Suddenly, this $16.78 an hour job that seems austere by auto standards looks to Werner like a comfortable life, an escape from the hardship facing so many other people still struggling to dig out from the 2009 recession.

Werner has moved out of government-subsidized housing and bought a newer SUV with leather seats and a built-in television screen. She’s planning to use profit sharing next year to look at buying her first home.

“I think things will all just go up from here,” she said.

Treasury Secretary Tim Geithner is pictured with Ford hourly workers last April in Chicago. About 13 percent of GM, Ford and Chrysler hourly workers, or 15,155 employees, now are entry level.

Photo credit: Bloomberg


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